Академический Документы
Профессиональный Документы
Культура Документы
—————————————————————————————————
Friday 2 October 1998 9 to 12
—————————————————————————————————
SECTION A
(i) y
x2 e x
3 1
(ii) y
(2x 1) 2 (x 4) 2
(TURN OVER
2
Yt
K t Lt
2 2
1 1 Y IG
3 Let A
B
and R
b 1 C a
Find (a) AB
(b) A-1
(c) A-1R .
3
4 Let
x ay
3
2x 2y
4
5 Minimise y
x12 2 x22 subject to the constraint x1 x2
1
6 (a) What are the maximum and minimum values of the function
3 2
f(x) = x - 8x + 16x - 1 in the interval [0, 4]?
(b) Sketch the graph of this function in the interval [0, 4].
u
x12 x2
where u denotes utility and x1 and x2 denote the quantities. If the budget
constraint is m = p1x1 + p2x2, determine the demand functions (that is, the
optimal values of x1 and x2 in terms of p1, p2, and m).
(TURN OVER
4
qt
s
3pt 1 21500
qt
d
8500 p t
SECTION B
(1 ) m
x1
m , x2
p1 p2
1
(b) If p1
1, p2
4, m
24 and
, what is the value of the consumer’s
maximised utility? 2
(c) Suppose m rises to 25. What is the new value of the consumer’s
maximised utility. What is the relation between the increase in utility
and the value of the Lagrange multiplier in (a)?
(d) Suppose it also takes 2 units of time to obtain one unit of x1 and 1
unit of time to obtain one unit of x2. The consumer has 15 units of time
available. With m = 25 formulate this problem using Lagrange
multipliers and solve for the optimal choices of x1 and x2. What
interpretation can you give to the ratio of the Lagrange multipliers in
this problem.
(TURN OVER
6
dB
(a) Derive
de
The firm pays a wage rate 5 for labour and a rental rate 4 for capital.
(b) Using Lagrange’s method, show that the firm’s cost function
can be written as:
4
c(q)
zq 3
(d) Solve the firm’s profit maximisation problem and show that
the firm’s supply function is:
3
q
27 p 3 .
64 z
(TURN OVER
8
13 A firm has a total cost function c = q2, where c denotes cost and q
denotes the level of output. There are two markets in which the firm’s
output can be sold. In market A demand for the product is given by:
q A
100 pA
where pA denotes the product price in market A. In market B demand for the
product is given by:
q B
120 pB
(a) Suppose the firm can act as a monopoly supplier to one of the
two markets. Which market will it supply to and how much output will it
produce?
form:
Y
CIG (1)
C
b(Y T) (2)
I
a hr (3)
T
T0tY (4)
Md
kY jr (5)
Ms
M (6)
(TURN OVER
10
11
P(Q)
a bQ a > 0 b > 0.
(c) Using the assumption that the retailers are identical, solve
for the equilibrium level of output for each retailer.
(TURN OVER